Indexes Close at Record High as Markets Move North: 5 Picks

The U.S. stock markets’ bullish-run entered its longest ever expansionary phase on Aug 22. In fact, the stock markets sustained their long-term winning streak despite global trade war concerns, series of geopolitical conflicts and impending fear of rising inflation.

As a result of markets’ northbound movement, two major indexes — S&P 500 and Nasdaq Composite — closed at an all-time high on Aug 24. The Dow 30 — another major stock market barometer — is also within a striking distance of reaching its all-time high. At this stage, investment in stocks which are part of these indexes with a favorable Zacks Rank and strong growth potential will be lucrative.

Broader Market Northbound

Month	Dow 30	S&P 500	Nasdaq
January	5.8%	5.6%	7.4%
February	-4.3%	-3.9%	-1.9%
March	-3.5%	-2.7%	-2.9%
April	0.3%	0.3%	0.1%
May	1.1%	2.2%	5.3%
June	-0.6%	0.5%	0.9%
July	4.7%	3.6%	2.0%
August ( up to 24th)	1.5%	2.1%	3.6%

The table clearly shows that stock market fluctuations which pushed all three major indexes into the negative territory in February and March gradually diminishing in the last four months. Barring a minor fluctuation of the Dow in June, all three indexes have provided positive returns in every month. August is also turning out to be positive for all three major indexes.

Indexes Close at Record High

On Aug 24, the benchmark S&P 500 index closed at 2,874.69, its all-time high toppling its previous high of 2,872.87 recorded in Jan 26. The S&P 500 — generally utilized by market participants as the barometer of the broad market movement — is up 7.5% year to date.

Same day, the tech-laden Nasdaq Composite ended at 7,945.98, marking a fresh all-time high exceeding its previous highest of 7,932.24 recorded on Jul 25. The tech-heavy index is up 15.1% year to date. Meanwhile, on Aug 24, the Dow 30 has closed at 25,790.35, 3.2% away from its record high closing of 26,616.71 on Jan 26. The blue-chip index has provided a return of 4.3% year to date.

Both S&P 500 and Nasdaq Composite are currently out of correction territory (a correction is an uplift of 10% from a recent low) which both the indexes’ had entered on Feb 8. Although the Dow 30 is reeling under the correction territory since Feb 8, it is on the brink of coming out of the rut for the first time in more than six months.

Russell 2000 Reaches a Fresh Milestone

Beside large-cap focused major stock indexes, the small-cap centric Russell 2000 index also achieved a fresh all-time high on Aug 24. The index touched an all-time high of 1,727 before closing at a record level of 1,725.67. Year to date, the Russell 2000 has increased more than 12%.  

Small-cap stocks have emerged as winning picks in the stock markets of 2018 primarily due to lingering trade-related conflict between the United States and its largest trading partner China as well as other geopolitical concerns.

Our Picks

Stock markets momentum has remained largely unhindered despite volatility. Massive tax cut, business-friendly policies and steady economic activities resulted in robust earnings results.

At this stage, we narrowed down our search to five stocks within the Dow 30, S&P 500 and Nasdaq Composite, each having a Zacks Rank #1 (Strong Buy) and strong growth potential. You can see the complete list of today’s Zacks #1 Rank stocks here.

The chart below shows price performance of our five picks year to date.

Amazon.com Inc. AMZN: The stock provided a massive positive earnings surprise of 1,347.1% in the trailing four quarters. Amazon has expected earnings growth of 279.6% for current year. The Zacks Consensus Estimate for the current year has improved by 38.8% over the last 60 days.

Illumina Inc. ILMN: The stock provided a positive earnings surprise of 25.2% in the trailing four quarters. Illumina has expected earnings growth of 36.5% for current year. The Zacks Consensus Estimate for the current year has improved by 12.1% over the last 60 days.

NetApp Inc. NTAP: The stock provided a positive earnings surprise of 15.3% in the trailing four quarters. NetApp has expected earnings growth of 27.4% for current year. The Zacks Consensus Estimate for the current year has improved by 9.1% over the last 60 days.

Intuitive Surgical Inc. ISRG: The stock provided a positive earnings surprise of 21.6% in the trailing four quarters. NetApp has expected earnings growth of 19.5% for current year. The Zacks Consensus Estimate for the current year has improved by 4.7% over the last 60 days.

CSX Corp. CSX: The stock provided a positive earnings surprise of 12.5% in the trailing four quarters. NetApp has expected earnings growth of 56.1% for current year. The Zacks Consensus Estimate for the current year has improved by 9.8% over the last 60 days.

Wall Street’s Next Amazon

Zacks EVP Kevin Matras believes this familiar stock has only just begun its climb to become one of the greatest investments of all time. It’s a once-in-a-generation opportunity to invest in pure genius.

Click for details >>

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CSX Corporation (CSX) : Free Stock Analysis Report
 
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